Gold Prices Under Pressure from Dollar Strength and Fed Policy
Gold prices showed a modest increase on Friday, lifted by market uncertainties following new U.S. tariffs on key trade partners. However, despite the uptick, the precious metal remains on course for a weekly loss, pressured by the continued strength of the U.S. dollar and hawkish signals from the Federal Reserve.
As of early Friday, spot gold rose 0.2% to $3,299.08 per ounce, but had already fallen 1.2% over the course of the week. U.S. gold futures followed a similar path, ticking up 0.1% to $3,351.60. Meanwhile, the U.S. Dollar Index surged to its highest level since late May, making gold more expensive for holders of other currencies — a factor that continues to dampen investor interest.
Analyst Edward Meir from Marex noted that gold has remained within a $3,250 to $3,450 range for nearly two months, but now appears headed toward the lower end, or even below. He attributed this to the Federal Reserve’s restrictive monetary stance, which has driven up the dollar and lowered gold’s appeal.
Earlier this week, the Fed left its benchmark interest rate unchanged between 4.25% and 4.50%, while downplaying the chances of a rate cut in September. Since gold doesn’t generate yield, it typically performs better in a low-interest-rate environment.
Tariff Tensions Fuel Market Volatility
Adding to investor caution, former President Donald Trump signed an executive order on Thursday imposing new “reciprocal” tariffs ranging from 10% to 41% on imports from dozens of countries and regions. The timing — just before the expiration of a trade deal deadline — has heightened fears of escalating trade tensions.
The order specifically increased tariffs on Canadian imports not covered by the USMCA agreement from 25% to 35%, while Mexico was granted a 90-day extension to negotiate a broader deal. These developments, coupled with rising inflation from import costs, have further clouded the outlook for the gold market.
“If these trade negotiations break down, we could see renewed support for gold as a safe haven,” Meir added.
Investors are now turning their focus to upcoming U.S. labor market data, which could offer further insights into the Fed’s policy direction. The results could influence both interest rate expectations and the trajectory of gold prices.
Bavaria Steps Into the Global Gold Market
Amid the shifting landscape of global precious metals, the German state of Bavaria has announced plans to launch its own gold investment coin, signaling a bold entry into the international gold market.
Set for release this fall, the “Bayern Thaler” aims to position itself alongside the world’s most recognized investment coins, such as the South African Krugerrand and the Canadian Maple Leaf. Unlike commemorative coins, which often change design, the Bayern Thaler is intended as a stable, long-term investment product featuring standard weights and a high gold content.
One of the coin’s standout features is its design: the obverse side will bear an image of Neuschwanstein Castle, one of Germany’s most iconic landmarks, symbolizing both Bavarian heritage and quality.
According to Michael Eubel, head of the precious metals division at BayernLB, Germany has not yet had a gold coin with the same international investment appeal as those from other countries. “There has been no German equivalent until now,” he said. “The Bayern Thaler is designed to change that.”
A New Era for Gold Investors
As global economic uncertainties and monetary policy shifts continue to influence gold prices, Bavaria’s move to offer its own investment coin adds a new dimension to the market. While gold remains under pressure in the short term, long-term demand for tangible, trusted assets like the Bayern Thaler may offer investors both security and symbolism — especially in times of financial instability.